The sale of new products has traditionally been through brick-and-mortar channels. To purchase a product, a customer typically travels from their home or work, to a store, selects the product, pays for the product, travels back to their home or work, and then uses the product at their home or work. Because customers physically need to travel to a store, the geographic region serviced by a store is typically constrained because customers will, with all other things being equal, travel to the closest store to purchase a product. The geographic region serviced by a store may also be constrained by governmental regions that are defined by governmental organizations, such as country, state, county, or city, as certain products may only be adapted to operate under the rules of such governmental organizations. For example, because different countries supply electricity at different voltages (e.g., 120v or 240v), a product sold in one country may not work in a different country. Even if a product could be used in a different region, the customer experience may be adversely impacted as the product may be adapted to the language, customs, and so on, of a particular region.
Product suppliers (e.g., retailers and manufacturers) may price a product differently for different regions (i.e., geographic regions and governmental regions) for various reasons. For example, a retailer who wants to attract new customers to a new store or keep existing customers in face of stiff competition may price a product at a low price in a certain region. As another example, a product supplier may want to price a product higher in regions with a high cost of doing business. Factors that may influence the cost of doing business include the cost of complying with government regulations, tax rates, currency exchange rates, the cost of living, the cost of product liability insurance, and so on.
Assuming that a product sold in one region can be used in another region, customers in a region in which a product is sold at a high price may travel to and purchase the product in a region where the product is sold at a low price. When pricing a product in a low-price region, a product supplier may factor into the price the revenue that may be lost from high-price regions because of sales in a low-price region.
Although cross-region purchasing has been somewhat of a problem for product suppliers, the problem has been traditionally limited to near-region boundaries because the cost of the time and travel may outweigh the cost savings of the lower price. The problem can even be limited when a product is sold via electronic commerce because the web pages serving in different regions can have prices that are appropriate to that region, and the product supplier can constrain shipment of a product to only the region where the product was purchased.
The problem is, however, not so limited for digital products such as computer programs, music, and video, which may be distributed on DVD or CD or electronically. For example, when a customer purchases a computer program from a brick-and-mortar retailer or through an electronic commerce retailer, the customer may be provided with a product key. A product key is typically a sequence of 16 (4-by-4) or 25 (5-by-5) alphanumeric characters. The product key is evidence that the customer purchased the product. To use the product, the customer may need to provide that product key electronically (e.g., via the Internet) to an authorization system so that the product key can be verified and access authorized. In the case of a DVD or CD, the authorization may result in a code being provided to the customer's computer so that the product can be used on that computer. In the case of electronic distribution, the authorization may allow the product to be downloaded to the customer's computer or allow the customer to set up and account to access the product as an on-line service (e.g., via a cloud).
One difficulty with the distribution of digital products is that it is relatively inexpensive to ship DVDs or CDs and essentially free to send product keys between regions. As a result, software products sold in one region may easily be accessed and used in a different region. Such cross-region use may result in loss of revenue for the product supplier, adverse user experiences, violation of governmental regulations, and so on.